UK bank chief denies 'hitting brakes too hard'

The Governor of the Bank of England today denied that recent rises in interest rates had put the UK economy on the brink of “a real slowdown”.

Mervyn King came in for criticism from one member of the Commons Treasury Select Committee in the UK, who believed the Bank had “hit the brakes too hard”.

Giving evidence to the committee, Mr King accepted the economy had lost momentum over autumn with growth “substantially” lower than expected at 0.4%.

The British housing market had also gone into reverse with most surveys reporting falls in property prices, while retail sales and investment data were weak.

But Mr King said it was overstating the case to claim the Bank’s Monetary Policy Committee (MPC) had hit the brakes too hard by raising rates three times between May and August to 4.75%.

Business surveys pointed to stronger growth in the fourth quarter and did not show an outright fall in manufacturing output, he said.

“The soft patch (in the third quarter) does not seem to be a portent of a real slowdown,” Mr King said.